Safety and Shipping 1912-2012: From Titanic to Costa Concordia

Safety and Shipping 1912-2012: From Titanic to Costa Concordia

Safety and Shipping 1912-2012: From Titanic to Costa Concordia


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Executive<br />

Summary<br />

March<br />

<strong>2012</strong><br />

This Executive Summary<br />

highlights key findings<br />

from a detailed report<br />

prepared by Allianz<br />

Global Corporate &<br />

Specialty (AGCS), in<br />

conjunction with the<br />

Seafarers International<br />

Research Centre of<br />

Cardiff University. For a<br />

copy of the full report<br />

please visit<br />

www.agcs.allianz.com<br />

Allianz Global Corporate & Specialty www.agcs.allianz.com<br />

<strong>Safety</strong> <strong>and</strong> <strong>Shipping</strong> <strong>1912</strong>-<strong>2012</strong>:<br />

<strong>From</strong> <strong>Titanic</strong> <strong>to</strong> <strong>Costa</strong> <strong>Concordia</strong><br />

An insurer’s perspective from Allianz Global Corporate & Specialty<br />

Maritime safety affects everyone, from blue collar fac<strong>to</strong>ry workers <strong>and</strong><br />

school children, <strong>to</strong> journalists <strong>and</strong> company chief executives. The global<br />

population depends on a safe <strong>and</strong> efficient shipping trade network for<br />

modern day living <strong>to</strong> continue unchecked. In the 100 years since the loss<br />

of the RMS <strong>Titanic</strong>, the maritime industry has worked steadily <strong>to</strong> improve<br />

safety performance so that the 23 million <strong>to</strong>nnes of cargo <strong>and</strong> 55,000<br />

cruise passengers that travel by ship every day do so safely <strong>and</strong> efficiently<br />

in the vast majority of cases.<br />

Total losses - % of world fleet<br />

1.0<br />

0.8<br />

0.6<br />

0.4<br />

0.2<br />

0.97%<br />

0.69%<br />

0.47%<br />

0.40%<br />

0.15%<br />

0.0<br />

1910 1935 1960 1985 2009<br />

Source: Calculated from Lloyd’s Register World<br />

Casualty Statistics 1900-2010<br />

At the turn of the twentieth century, one of the most<br />

renowned shipping tragedies of all time occurred in the<br />

midst of the Atlantic Ocean. In April <strong>1912</strong>, the RMS <strong>Titanic</strong>,<br />

the pride <strong>and</strong> joy of White Star Line, sank on her maiden<br />

voyage from Southamp<strong>to</strong>n, UK <strong>to</strong> New York, USA. <strong>Titanic</strong>,<br />

at the time the world’s largest passenger steamship,<br />

struck an iceberg four days in<strong>to</strong> the crossing <strong>and</strong> sank<br />

<strong>to</strong> the ocean bed taking 1,513 lives. Since that human<br />

tragedy, the maritime industry has actively endeavored<br />

<strong>to</strong> improve safety records <strong>and</strong> it is no understatement <strong>to</strong><br />

say that shipping in <strong>2012</strong> is a far safer form of transport<br />

for passengers, cargo, seafarers <strong>and</strong> ships. However,<br />

notwithst<strong>and</strong>ing these advances, significant challenges<br />

remain as the recent <strong>Costa</strong> <strong>Concordia</strong> <strong>and</strong> Rabaul Queen<br />

disasters have demonstrated.<br />

No one separate development can be singled-out for<br />

this progress: <strong>to</strong>day’s safer shipping environment is<br />

the culmination of a number of initiatives, research,<br />

regulations, <strong>and</strong> innovations. The full report outlines<br />

some of the major areas where the shipping industry has<br />

benefitted from improvements, explains how shipping<br />

in the twenty-first century is now safer than ever, <strong>and</strong><br />

reviews current <strong>and</strong> future challenges <strong>to</strong> maritime<br />

safety. Perhaps of most interest are the emerging<br />

challenges facing the industry. Key findings about future<br />

challenges are listed overleaf.

Total losses by ship type: 2000-2010<br />

(number of losses)<br />

Tankers 121 7.6%<br />

Bulk Carriers 120 7.6%<br />

Cargo Vessels 706 44.5%<br />

Containers 17 1.1%<br />

Reefers 24 1.5%<br />

Passengers/General Cargo 83 5.2%<br />

Passenger Cruise 17 1.1%<br />

Fishing 375 23.6%<br />

Offshore Industry 20 1.3%<br />

Other 103 6.5%<br />

Source: Lloyd’s Register Fairplay, World Fleet Statistics 2000-2010<br />

• Ship sizes have increased significantly, dwarfing the<br />

<strong>Titanic</strong> in comparison. The largest modern container<br />

ships, such as Maersk’s new Triple-E class, pose<br />

challenges for insurers due <strong>to</strong> their sheer scale <strong>and</strong><br />

value. Other ships are pushing the design envelope,<br />

breaking new ground in terms of design challenges<br />

which has led <strong>to</strong> concerns about structural integrity.<br />

• Cruise ships: Despite the strong passenger safety<br />

record of the cruise industry, the modern trend <strong>to</strong>wards<br />

ultra-large cruise ships, carrying over 6,000 passengers,<br />

poses new challenges, especially in terms of evacuation<br />

<strong>and</strong> rescue in remote environments. The International<br />

Maritime Organisation (IMO) has introduced regulations<br />

addressing such risks, including proactive risk<br />

management with improved fire safety systems <strong>and</strong> a<br />

focus on the need for such vessels <strong>to</strong> be their ‘own best<br />

lifeboat’ so that, in the event of a casualty, persons can<br />

stay safely on board, as the ship proceeds <strong>to</strong> port.<br />

• Training <strong>and</strong> labor: with increased cost pressure,<br />

many ship-owners look <strong>to</strong> source crews from emerging<br />

economies due <strong>to</strong> lower wage dem<strong>and</strong>s. Despite IMO<br />

attention through international st<strong>and</strong>ards, training<br />

regimes <strong>and</strong> assessment are not consistent <strong>and</strong> may<br />

lead <strong>to</strong> variations in crew <strong>and</strong> officer competence.<br />

• Crewing levels in a competitive industry continue<br />

<strong>to</strong> pose risks, despite the greatly improved efficiency<br />

of modern vessels, <strong>and</strong> may compromise margins of<br />

safety. Some commenta<strong>to</strong>rs regard minimum crewing<br />

<strong>Safety</strong> & <strong>Shipping</strong> <strong>1912</strong>-<strong>2012</strong>: Executive Summary<br />

levels as <strong>to</strong>o low, <strong>and</strong> point out they do not allow for<br />

the inevitable extra tasks that 24 hour operations<br />

require – with ‘human fac<strong>to</strong>r’ risks such as fatigue<br />

being significant causes of accidents.<br />

• Inadequate risk management is identified as a key<br />

challenge which can be addressed through improved<br />

safety management systems <strong>and</strong> processes.<br />

• Piracy continues <strong>to</strong> threaten shipping, especially off<br />

Somalia <strong>and</strong> the Horn of Africa where 28 ships were<br />

attacked in 2011, with attacks also being seen in other<br />

regions (such as West Africa). The economic impact of<br />

piracy was estimated <strong>to</strong> be around $7 billion in 2011.<br />

• Language barriers are also cited as potential risks,<br />

given the dependence on English as the ‘language of the<br />

seas’. With increasingly multi-national crews, concern<br />

has been raised about communication in an emergency,<br />

or even misunderst<strong>and</strong>ings in routine operations.<br />

• Arctic <strong>and</strong> Polar waters: climate change is opening<br />

up access <strong>to</strong> previously impassable seaways, but<br />

the development of new routes, such as the North<br />

East Passage, pose great challenges in terms of ice<br />

navigation, environmental concerns, <strong>and</strong> design<br />

<strong>and</strong> construction dem<strong>and</strong>s, as well as emergency<br />

procedures in extremely hostile environments.<br />

• Poor enforcement & coordination: with a<br />

complex regula<strong>to</strong>ry environment, coordination of<br />

such regulations needs <strong>to</strong> be improved. Despite an<br />

alignment of objectives, individual enforcement<br />

bodies do not always coordinate actions, nor is it easy<br />

<strong>to</strong> enforce responsibility in the event of an incident.<br />

• Bureaucracy is cited as a pressure on crews <strong>and</strong><br />

officers, diverting them from other tasks <strong>and</strong><br />

potentially compromising safety. This is compounded<br />

by minimum crewing levels which place further<br />

burdens on already hard-pressed crews. Allocating<br />

responsibility for such matters, perhaps via a ‘purser’<br />

role, could address this challenge.<br />

• Fire remains a major on-board risk especially in<br />

‘Ro-Ro’ ferries (with relatively open decking) <strong>and</strong> also<br />

on passenger ships with increased ‘hotel’ services <strong>and</strong><br />

large passenger numbers.<br />

While these emerging safety risks need <strong>to</strong> be addressed<br />

<strong>to</strong> further improve incident records going forward, in its<br />

review of safety improvements since the <strong>Titanic</strong> accident,<br />

the report finds that much progress has been already<br />

made in attending <strong>to</strong> safety issues.<br />


Key facts <strong>and</strong> figures<br />

Causes of <strong>to</strong>tal loss (2000-2010)<br />

(number of losses)<br />

Collision 190 12.0%<br />

Contact 34 2.1%<br />

Fire/Explosion 233 14.7%<br />

Foundering 778 49.1%<br />

Wrecked/Str<strong>and</strong>ed 286 18.0%<br />

Hull/Machinery 33 2.1%<br />

Missing 6 0.4%<br />

Other 26 1.6%<br />

Source: Lloyd’s Register Fairplay, World Fleet Statistics 2000-2010.<br />

Driving safety<br />

<strong>Safety</strong> & <strong>Shipping</strong> <strong>1912</strong>-<strong>2012</strong>: Executive Summary<br />

• Despite a trebling of the world fleet <strong>to</strong> over 100,000 ships in 2010, <strong>and</strong> a <strong>to</strong>tal fleet <strong>to</strong>nnage now approaching 1 billion gross <strong>to</strong>nnes,<br />

shipping losses have decreased significantly from 1 ship per 100 per year (<strong>1912</strong>) <strong>to</strong> 1 ship per 670 per year in 2009.<br />

• World seaborne trade continues <strong>to</strong> grow rapidly, driven by globalization <strong>and</strong> supported by containerization, having trebled since 1970<br />

<strong>to</strong> over 8.4 billion <strong>to</strong>nnes of cargo loaded per annum.<br />

• Marine transport can be regarded as one of the safest means of passenger transport overall: in Europe, it is ranked after rail, air <strong>and</strong> bus/<br />

coach as the fourth safest means, with far lower fatal accident rates than car, mo<strong>to</strong>rcycle, bicycle or walking.<br />

• However, seafaring remains dangerous as a profession. While professional seafarer fatality rates have fallen – for example, in the UK<br />

per 100,000 seafarer-years, from 358 (in 1919) <strong>to</strong> 11 in 1996-2005 – this fatality rate is still twelve times higher than in the general<br />

workforce. Despite inconsistent data, other country statistics appear <strong>to</strong> be considerably higher: for example Hong Kong recorded 96 per<br />

100,000 seafarers per annum for 1996-2005, <strong>and</strong> Pol<strong>and</strong> a rate of 84 per 100,000 seafarers per annum for the same period.<br />

• Most losses can be attributed <strong>to</strong> ‘human error’ – a broad category estimated <strong>to</strong> be responsible for between 75%-96% of marine<br />

casualties. Pressures of competition (often shore-based) <strong>and</strong> fatigue are frequently cited as significant causes – a particular matter of<br />

concern in busy shipping areas such as the Baltic where crews may have little time <strong>to</strong> rest between periods of duty.<br />

• The most common primary causes of shipping losses are foundering (49% of losses), wrecking/str<strong>and</strong>ing (18%) <strong>and</strong> fire/explosion<br />

(15%) while hull or machinery failure only accounts for around 2% of losses.<br />

• Dry (bulk) cargo vessels have higher than average loss rates (44% of losses, despite representing 20% of the world fleet by number).<br />

Conversely, tankers, container vessels <strong>and</strong> offshore industry ships have relatively low loss rates.<br />

• <strong>Shipping</strong> is highly concentrated in<strong>to</strong> modern sea-lanes as vessels navigate between major ports <strong>to</strong> optimize efficiency. This results<br />

in clustering of losses in certain key regions. Accident ‘black spots’ include South China, Indo-China, Indonesia <strong>and</strong> Philippines (17%<br />

of losses in 2001-2011), followed by East Mediterranean <strong>and</strong> Black Sea (13%), <strong>and</strong> Japan, Korea <strong>and</strong> North China (12%). The seas<br />

around the British Isles also show relatively high loss concentrations (8%).<br />

<strong>Safety</strong> has improved through a combination of<br />

technology, cultural <strong>and</strong> training improvements, <strong>and</strong><br />

regulations, as well as through new construction <strong>and</strong><br />

design techniques.<br />

Additionally, past experience demonstrates that major<br />

accidents have often been the catalysts for key changes: for<br />

example, the International Convention for the <strong>Safety</strong> of Life at<br />

Sea (SOLAS) of 1914 was spurred on by the loss of the <strong>Titanic</strong>.<br />

A similar impact can be expected from the <strong>Costa</strong> <strong>Concordia</strong><br />

incident – just as we have previously seen with the Herald<br />

of Free Enterprise (1987), the Exxon Valdez (1989), <strong>and</strong> the<br />

Es<strong>to</strong>nia (1994) losses, which drove the creation of <strong>Safety</strong><br />

Management Systems under the ISM Code.<br />


Technology & design in focus<br />

Technology has been a key driver of safety, from the<br />

introduction of gyrocompasses <strong>and</strong> the first use of aviation<br />

<strong>to</strong> spot icebergs in 1914 <strong>to</strong> the m<strong>and</strong>a<strong>to</strong>ry use of Electronic<br />

Chart Display & Information Systems (ECDIS) in <strong>2012</strong>.<br />

Military innovations drove improvements in the<br />

mid-20th century - for example, in Radar <strong>and</strong> in wireless<br />

communications - while later technologies such as<br />

Au<strong>to</strong>matic Radar Plotting Aid (ARPA), Global Positioning<br />

Systems (GPS) <strong>and</strong> Au<strong>to</strong>matic Identification System<br />

(AIS), have reduced accidents through greatly improving<br />

‘situational awareness’ via increased access <strong>to</strong> real time<br />

information.<br />

In addition, search <strong>and</strong> rescue efforts are greatly assisted<br />

by modern (satellite-assisted) location-finding technologies<br />

such as radar transponders <strong>and</strong> distress beacons.<br />

However, experts warn of dependence on single<br />

technologies, citing examples where reliance on<br />

technology has led <strong>to</strong> major incidents.<br />

Improvements have also stemmed from changes in<br />

construction <strong>and</strong> design processes. Ship building<br />

techniques such as pre-fabrication <strong>and</strong> welding have<br />

improved quality <strong>and</strong> structural integrity, while computer<br />

aided design has radically speeded up the design process,<br />

allowing modeling <strong>to</strong> replace physical trial <strong>and</strong> error.<br />

Training & Culture<br />

Over the past one hundred years, training has moved<br />

from being localized <strong>and</strong> unregulated <strong>to</strong> a global footing<br />

<strong>and</strong> is now subject <strong>to</strong> close international scrutiny. The<br />

World fleet size by number of ships: 1900-2010<br />

120,000<br />

100,000<br />

80,000<br />

60,000<br />

40,000<br />

20,000<br />

0<br />

1900<br />

1910<br />

30,058<br />

1910<br />

1920<br />

1935<br />

30,979<br />

1930<br />

1940<br />

1950<br />

1960<br />

36,311<br />

1960<br />

1970<br />

1985<br />

76,395<br />

1980<br />

1990<br />

2000<br />

2010<br />

103,392<br />

2010<br />

Source: Lloyd’s Register Fairplay, World Fleet Statistics 1900-2010<br />

St<strong>and</strong>ards of Training Certification <strong>and</strong> Watch-keeping<br />

for Seafarers Convention (STCW) in 1978 established<br />

international benchmarks in this area – <strong>and</strong> has since<br />

been enforced by the IMO through publishing its ‘White<br />

List’ of countries which comply with these st<strong>and</strong>ards.<br />

<strong>Safety</strong> Management Systems have also driven an<br />

increased safety culture, in part arising from the failures<br />

of the previous piecemeal approach highlighted in the<br />

aftermath of the Herald of Free Enterprise disaster in<br />

1987. Spurred by this accident, the International <strong>Safety</strong><br />

Management Code (ISM Code), which the IMO adopted<br />

in 1993, has driven best practice <strong>to</strong> be more widely<br />

accepted <strong>and</strong> institutionalized in the industry.<br />

However, inadequate risk management remains a<br />

challenge – with one survey attributing this as a main or<br />

contributing fac<strong>to</strong>r in nearly 40% of accidents.<br />

Regulation<br />

<strong>Safety</strong> & <strong>Shipping</strong> <strong>1912</strong>-<strong>2012</strong>: Executive Summary<br />

The maritime industry is now highly regulated, with a<br />

large number of organizations responsible for different<br />

facets of safety. However, it is the primary body, the IMO,<br />

formed in 1948, as a United Nations agency, which has<br />

driven much international regulation.<br />

Prior <strong>to</strong> the IMO’s formation, the first SOLAS convention<br />

was driven by the loss of the <strong>Titanic</strong>, <strong>and</strong> on being<br />

adopted by its international signa<strong>to</strong>ries in 1914 formed a<br />

l<strong>and</strong>mark treaty on marine safety. Subsequent revisions,<br />

combined with other key IMO conventions such as the<br />

International Regulations for Preventing Collisions at<br />

Sea (COLREG) <strong>and</strong> the International Convention on<br />

Loadlines, have further tightened safety rules.<br />

Such regulations have not simply reduced the risk of<br />

accidents; they have also addressed the challenges of<br />

responding <strong>to</strong> an accident with, for example, the Global<br />

Maritime Distress <strong>and</strong> <strong>Safety</strong> System (1999) establishing<br />

improved global procedures for search <strong>and</strong> rescue.<br />

The industry itself has also played an active part in selfregulating<br />

<strong>to</strong> improve st<strong>and</strong>ards: for example, oil tanker<br />

owners have set higher st<strong>and</strong>ards since environmental<br />

disasters such as the Exxon Valdez by tightening risk<br />

management procedures <strong>and</strong> establishing vetting<br />

systems, forcing others <strong>to</strong> adopt similar safety st<strong>and</strong>ards.<br />


Copyright © <strong>2012</strong> Allianz<br />

Global Corporate &<br />

Specialty AG. All rights<br />

reserved.<br />

The material contained<br />

in this publication is<br />

designed <strong>to</strong> provide<br />

general information only.<br />

While every effort has<br />

been made <strong>to</strong> ensure<br />

that the information<br />

provided is accurate,<br />

this information is<br />

provided without any<br />

representation or<br />

warranty of any kind<br />

about its accuracy <strong>and</strong><br />

Allianz Global Corporate<br />

& Specialty cannot be<br />

held responsible for any<br />

mistakes or omissions.<br />

Quality control <strong>and</strong> enforcement<br />

Working with the IMO, Members States check<br />

operational safety at ports around the world through the<br />

Port State Control (PSC) system.<br />

Established under the STCW convention in 1978,<br />

national PSC can inspect <strong>and</strong> detain shipping when<br />

necessary <strong>to</strong> enforce st<strong>and</strong>ards. The results of<br />

inspections are published freely online, creating<br />

considerable transparency in this process.<br />

While the number of inspections has increased with<br />

increased trade, detentions have notably decreased: in<br />

the Asia Pacific region, inspections increased by 48%<br />

from 2001-2010, but detentions dropped by 5%.<br />

Flag States further support the global enforcement<br />

of IMO legislation. Flag states are those under whose<br />

national flag a ship sails, <strong>and</strong> on whose register of<br />

shipping each vessel is recorded.<br />

However, “open registries” or “Flags of Convenience”<br />

have also emerged since the 1950s, <strong>and</strong> some have<br />

attracted criticism for a perceived relaxation of<br />

regula<strong>to</strong>ry control, either through non-ratification of<br />

legislation, or non-enforcement of ratified legislation.<br />

Contact us<br />

Classification Societies offer another important element<br />

<strong>to</strong> maintaining safety st<strong>and</strong>ards. These independent<br />

bodies develop <strong>and</strong> apply technical st<strong>and</strong>ards <strong>to</strong> ship<br />

design <strong>and</strong> construction. They have, however, been<br />

subject <strong>to</strong> criticism for failing on occasion <strong>to</strong> spot<br />

potential technical weaknesses in advance <strong>and</strong>, more<br />

recently, when some Societies have started <strong>to</strong> enter in<strong>to</strong><br />

ship design services – a move that has raised concerns<br />

in respect of conflicts of interest when the Societies<br />

may classify the very ships they have themselves<br />

designed. However, other commenta<strong>to</strong>rs refer <strong>to</strong> the<br />

improvements in ship safety that have been achieved<br />

through the design contributions of some Societies.<br />

Marine insurers such as AGCS should also contribute<br />

through transparent underwriting <strong>and</strong> dialogue with<br />

ship-owners, supported by proactive risk consulting <strong>to</strong><br />

reduce risk in advance. Insurers can encourage best<br />

practice in marine operations, recognizing the efforts of<br />

leading ship-owners <strong>to</strong> reduce risk – for the benefit of all<br />

parties.<br />

For more information or for a copy of the full report, please contact your local Allianz Global Corporate & Specialty<br />

Communications team, or visit the AGCS website.<br />

London<br />

Hugo Kids<strong>to</strong>n<br />

hugo.kids<strong>to</strong>n@allianz.com<br />

+44 (0)203 451 3891<br />

Jonathan Tilburn<br />

jonathan.tilburn@allianz.com<br />

+44 (0)203 451 3128<br />

Munich<br />

Heidi Polke<br />

heidi.polke@allianz.com<br />

+49 89 3800 14303<br />

Singapore<br />

Wendy Koh<br />

wendy.koh@allianz.com<br />

+65 6395 3796<br />

Allianz Global Corporate & Specialty (AGCS) consists of various legal companies operating under the Allianz Global Corporate & Specialty br<strong>and</strong>, namely Allianz Global Corporate & Specialty AG, Allianz Global Corporate &<br />

Specialty (France), Allianz Global Corporate & Specialty North America (legal name Allianz Global Risks US Insurance Company) <strong>and</strong> AGCS Marine Insurance Company.<br />

Allianz Global Corporate & Specialty AG, Fritz-Schaeffer-Strasse 9, 81737 Munich, Germany. London Branch: Allianz Global Corporate & Specialty AG, 60 Gracechurch Street, London EC3V 0HR<br />

Paris<br />

Isabelle Caminade<br />

isabelle.caminade@allianz.com<br />

+33 (0) 1 58 85 97 22<br />

New York<br />

<strong>Safety</strong> & <strong>Shipping</strong> <strong>1912</strong>-<strong>2012</strong>: Executive Summary<br />

Jacqueline Maher<br />

jacqueline.maher@agcs.allianz.com<br />

+1 646 472 1479<br />


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